Ladies and gentlemen, welcome to the Orange Belgium Q1 Results 2017 Conference Call. (Operator Instructions) I would now like to hand over to Siddy Jobe, Director, Investor Relations and Corporate Finance. Mr. Jobe, the floor is yours.

Hello. Good morning, ladies and gentlemen and welcome at Orange Belgium's analyst and investor conference call on the results of the first quarter of 2017. My name is Siddy Jobe. I guess, most of you know me. And we have here with us, Michael Trabbia, Orange Belgium's Chief Executive Office; and Arnaud Castille, Orange Belgium's Chief Financial Officer. As usual, I trust you all have received our financial communication of this morning. If not, you can still retrieve it from the financial communication section of our website.

Further, I would like to highlight that we have changed the definition for the calculation of our ARPU. The change consists in using a 3 months average ARPU instead of a 12 months average ARPU.

We believe, this change provides you with more information on the actual pricing environment in the reported quarter. In our press release, you will find a section providing you a summary overview of the previously reported 12-month rolling ARPU and the newly reported 3-month rolling ARPU. Okay.

I'm now ready to turn over the call to Michael for his opening remarks.

Thank you, Siddy and good morning, ladies and gentlemen. As Arnaud will detail in a few minutes, we delivered 0.6% total service revenues growth and 3.6% EBITDA growth on a comparable basis. And this, despite a number of adverse factors such as the EU roaming impact, an increased promotional activity in the mobile market and the negative EBITDA contribution of our new cable business, taking into account, we are ramping up this activity.

The first quarter of 2017 was a quarter in which we reached significant milestones in the rollout of our high quality convergent offering.

First of all, we successfully launched our brand new LOVE proposition, mid-February; and second, we reached 50,000 customers at the end of March. The growing number of LOVE customers is confirming the quality of our offer. This is really worth noting, as it is the first time that a third player is finally able to successfully enter the broadband and TV market in Belgium.

And we are eager to expand further our LOVE family as we aim to double our LOVE customer base to 100,000 by the end of the year. In the medium-term, we are confident that we can reach our ambition of 10% broadband market share.

11 months ago, we rebranded into Orange. Since then, we have been working hard to reconnect with the Belgian population under this new brand. Hand-in-hand, with this rebranding, we are positioning Orange as a convergent brand in Belgium. The strong marketing of our convergent LOVE offer is allowing us to further stimulate the market awareness of Orange as a full-fledged convergent player and will act as an important booster for our convergent offer.

In addition to the 50,000 broadband and TV accesses, we see a further validation of our fixed mobile convergence strategy as we now have 78,000 associated mobile SIM cards. Moreover, the success of convergence as an acquisition tool is confirmed in the first quarter of 2017 as the rate of newly acquired customer, who were not previously Orange mobile customers, has increased compared to 2016.

In the coming months or weeks, the Belgian telecom regulator, BIPT, and the regional media regulators will present their draft analysis on the review of the broadband and TV distribution markets.

As you know, Orange Belgium is arguing strongly to move the cable regulation model towards cost-plus oriented wholesale access charges and to bring some operational input.

We strongly believe that the current market situation, along with our demonstrated ability to finally afford real and qualitative alternative in the market, and the unavoidable and confirmed issue of the current retail managed model will lead to this necessary change towards customers.

On the mobile side, the demands fundamentals of the Belgian markets have remained unchanged and are still underpinned by the continued increase in 4G smartphone penetration, and by the sustained increase in mobile data usage of the Belgian population.

On the supply side, however, the market is very competitive with an increase in promotional activity in the first quarter of 2017. Within this context, Orange Belgium remained focused on value creation.

First of all, as we are transitioning from a mobile-only operator into high quality convergent operator, we started in the first quarter of 2017 to reduce the amount we are investing in subsidized offer.

We believe convergence going forward will allow us to achieve savings in terms of mobile customers acquisitions and retention costs by more effectively reaching out to new convergent customers and by reducing our churn.

Then, we keep our focus on accompanying customers in their increased usage of mobile data, while balancing this with healthy monetization of mobile data.

At the end of the first quarter of 2017, 4G smartphone penetration came out above 50%, while the average monthly mobile data consumption of the smartphone population has further stepped up in March 2017 to 1.5 gigabytes, contributing to the 60% year-on-year increase in total data traffic. 4G now represents 83% of our total data traffic.

As a result of this structural trend, the postpaid ARPU increased to EUR 28.9 from EUR 28.6 a year ago, despite the adverse EU roaming impact. Finally, I would also like to highlight that customer experience is a key priority for our company. That is why we have started a comprehensive digital transformation plan which will enable us to simplify our processes and improve our interactions with our customers.

Already today, various teams within the company have been working on different transformation projects with the aim to improve the performance of the customer provisioning chain.

The entire digital transformation program will be a company-wide effort spread over the coming years, but we are determined to make this exercise a success with benefits that will start to be visible as of 2018.

Thank you, Michael, and thanks to all of you for joining us on today's call. So as you heard in Michael's comments, we were able to deliver growth in both total service revenues and EBITDA. And this, despite a number of adverse factors such as the EU roaming impact, the increased promotional activity in the mobile market and the negative EBITDA contribution of our cable business as we are ramping up this activity.

So looking at our result at the high level. There are a few element, which I think are important to note this quarter: first, the underlining mobile service revenue growth remained solid with an increase of 1.7% and allowed to almost compensate entirely for the negative impact of EU roaming regulation; second, the positive EBITDA evolution reflects our ability to further improve our cost structure while driving growth in the new business; and finally, the strong cash flow generation which led to a net financial debt-to-EBITDA ratio of 1x from 1.4x a year ago.

With that said, let's get into more details on each aggregate, starting with the top line. So Orange Belgian Group reached a total turnover of EUR 307.2 million in the first quarter of 2017. Total service revenues came out at EUR 274 million, up plus-0.6% year-on-year with mobile service revenues up 1.7% once adjusted for EU roaming, and fixed service revenue is progressing well with a performance of plus-14.3% year-on-year.

On the mobile side. We have realized 2,900 net adds while reducing our subsidy budget by more than 30% in the first quarter of 2017 compared to the first quarter of 2016.

As indicated earlier by Michael, we are stepping up our focus on value. And we're willing to forsake volume growth in the favor of value growth. Moreover, we are convinced, convergent will increasingly be our driver of gross adds and churn reduction. Leading, anyhow, to an increasing mobile customer base.

The recent launch of our installment plan will also allow us to provide a more cost efficient alternative to subsidies. The postpaid ARPU continued to increase from EUR 28.6 a year ago to EUR 28.9 on the back of a healthy monetization of 4G mobile data. The fixed service revenues are accelerating in line with the uptake of our convergent customer base. Thereby, more than compensating the decline of our legacy wholesale and fixed enterprise revenues.

Moving down the income statement. The adjusted EBITDA of the Orange Belgium Group amounted to EUR 72.2 million in the first quarter of 2017 compared to EUR 53.8 million in the first quarter of 2016.

The adjusted EBITDA margin amounted to 26.3% of service revenues in the first quarter of 2017 compared to 19.8% in the same period a year ago.

The year-on-year comparison basis for the first quarter of 2017 was favorable, impacted by the EUR 15.8 million provision related to the 2016 Walloon pylon tax booked in the first quarter of 2016.

Filtering out this effect, the adjusted EBITDA would still have increased by the solid 3.6% year-on-year. So reduction of our roaming prices in Europe had an adverse impact on the adjusted EBITDA of EUR 5.3 million in the first quarter of 2017.

The operational expenses related to the Orange TV and Internet offering, including the monthly cable wholesale fee paid to the cable operators, amounted to EUR 9.7 million in the first quarter of 2017 compared to EUR 2.4 million in the first quarter of 2016.

In addition to our convergent commercial success, we are also making our initial step forward in the industrialization of our convergent business. This industrialization relates to the streamlining of our clients' operator services such as marketing, sales, activation and provisioning. And customer care in a convergent session, but also through the tighter convergent integration of our back-end services such as our ERP, CRM. This will allow us in the future to seek more revenues to reduce our churn and to realize synergies savings.

Moving to our level of cash. The Orange Belgium Group invested EUR 32.2 million, including EUR 11.4 million dedicated to cable. This implies that our core CapEx are further declined by 2.9% year-on-year in the first quarter of 2017.

We generated an operating cash flow of EUR 39.8 million in the first quarter of 2017. And our net financial debt stood at EUR 323.7 million at the end of the first quarter of 2017, resulting in a net financial debt reported EBITDA ratio of 1x.

So based on the results of the first quarter 2017, we reiterate our guidance for 2017. Meaning, we expect growth in total service revenues and an adjusted EBITDA between EUR 290 million and EUR 310 million. We again highlight, the guidance shows a strong ambition is to say taking into account the EU roaming regulation impacted for -- of EUR 31.9 million in 2017.

I have 3 questions please. Firstly, your Belgian mobile service revenue trend, even ex roaming, deteriorated to plus-1.3% Q1 versus 5.5% in Q4. I was just wondering if you -- if it's possible for you to split out the drivers of that. And then, in particular, what was the SMS impact, the SMS interconnect impact, what was actually due to your falling subscriber base? And secondly, just sticking with mobile, you lost 44,000 customers in Q1, again in Belgium, versus 21,000 in Q4. I was just wondering is it possible to, again, split that between customers that are churning on prepaid, because of the new regulation? And actually customers that you're losing to your competitors? And just lastly, would you consider cutting mobile price further if your subscriber base continues to fall over the next few quarters?

Okay. On the mobile service revenues. So as we mentioned in the -- in our press release, the total service revenue -- total mobile service revenue is slightly decreasing. No, no -- excuse me, excuse me. I spoke about the consolidated churn number is slightly decreasing. As far as the mobile service revenue, it's a slight increase of 0.6%. And if we retreat by the impact of the roaming, it's increasing by 1.7%. But yes, there is an impact of the decrease of the SMS revenue. And to be concrete, this impact in the first quarter has increased, because we see a decrease of about EUR 4 million, so it's about an impact of 2% in terms of growth. We think it's mainly due to the penetration of the smartphone. And -- but you have to know, this impact has a neutral impact on our EBITDA. So we don't know if this trend is going to continue at this level. If so it was higher than in Q4. So we will see for the future. But surely the smartphone penetration had an impact in the trends of the SMS.

For the customer base, in terms of mobile. Yes, the customer base is declining on the whole, but it's mainly a decline in our prepaid business due to, maybe, the process of identification. But you have to know there is a positive migration from prepaid to postpaid. And our postpaid customer base is increasing by 1.5%. So -- and with an ARPU increasing. So all-in-all, it's -- there is a value creation because the revenues, as I said, is increasing. But of course, we see a switch from prepaid to postpaid accelerating this term. And maybe, we will observe the same trend in the second term of 2017. But I don't want to disclose too much about the churn. It's true that competition was quite strong. The promotion and the competition was quite strong in Q1. But as I said, we prefer to put our effort on convergent and maybe less in subsidy. As I said, the subsidies have decreased by 30%. That can explain a part of our slow increase in postpaid. But again, it's with an increase in our ARPU, so it's a value creation trend.

That's great. Can I just follow up on that? Is it fair to say that there is a significant amount of inactive prepaid customers within your overall prepaid base? I.e., customers just aren't paying you anything. Is that fair to say? Just in general.

No, in prepaid you have different kind of clients there. I have the youngster segment where I -- obviously people are very active. But then you also have my other setups, i.e., in alarm systems and so on, where indeed those cards are not that active. So what I would assume is that at the end of the registration period, there will be still a good amount of cards that will not be registered, activated. And hence, we have to deactivate them. But I would -- I assume that those are the really low ARPU customers without any impact on mobile service revenues.

Yes, yes, indeed. Michael speaking. There is really a wide range of activity in the prepaid base which is -- it is the situation. Maybe to comment a little bit more, in the past quarters -- and it is too early because we have -- we don't have the results in the first quarter of our competitors, but in the past quarters, we have been doing rather quite well compared to the market on the prepaid. Second, what I would like to add is that we have I think the best registration process in the market. Very simple and smooth process and it's working very well within a few segments and it is available in all the shops and all the indirect channels. So we are quite confident we are able to register the vast majority of our prepaid customers and in particular, the customers who are really the most active and who are generating the main ARPU.

Maybe on your last question on the price. Of course, I will not disclose or comment on any future marketing strategy. Because obviously, this is also depending on the market. And I won't comment on that. But what I would say is, what we are seeing is promotion -- increased promotion in the first quarter, not hard changes in the portfolios of the market. So this is the situation we are seeing. And it's, I would say, time-limited promotion. So this is not, I would say, a signal. We have not seen it and we have no evidence today that the fundamental of the price portfolio is evolving in the market.

I have 2 questions please. And the first one is on your postpaid mobile adds, you added around 2,000 customers. And I wonder if you can just -- if you can give a split of how many of those are actually coming from your new cable customers? And also follow on that, I was wondering if you can give a time line in terms of how -- when you're going to push for the second and the third SIMs within the cable base? And second question is on cost savings. I think in your press release, you talk about industrialization of the convergent offer. And you're -- and I was just wondering, how much do you think it's going to cost to complete this process? And what are the savings that can be generated from this process?

On the first question, as you have seen we have disclosed the number of associated SIM cards. We have associated to our fixed customers, our LOVE customers. So you can see the increase on the mobile SIM cards associated between Q4 and Q1. So as I said, we have 78,000 mobile SIM cards at the end of March associated to the fixed compared to 57,000. So it is a 21,000 increase, thanks to convergence. And as Arnaud mentioned, this is also something that, of course, then within this 21,000 you have some existing customers and you have some new customers. As we mentioned at the end of last year, we had 30% of new customers within those 57,000 mobile SIM cards. And I have not disclosed the figure, but I have mentioned that this ratio have increased in the first quarter. So you can see that. Obviously, this is -- this convergence uptake helps us on the mobile acquisition and this is also something that helped us to have voluntary reducing of our subsidy in the mobile market.

On the cable and its industrialization. You know so far our organization around this new offer, it was more a project organization, a business development organization. And little-by-little we integrate the convergent team with, I can say the former core business, the mobile SIM. So integrating the 2 businesses step-by-step, we can save cost. And of course, there is big economy of scale because the base is -- the customer base is increasing. We are able to save cost. And -- because as you know, we have some fixed cost to be able to launch and to increase our offer for cable. So all-in-all, I don't want to disclose a precise cost for our cable P&L, but we see an increase in margin. Always negative in 2017. Thanks to integration, industrialization and economy of scale. And as we mentioned in the last conference call, we see, depending on the wholesale cost, positive margins in the coming years, but not for 2017.

And if you can just follow up on that. I mean, I remember 2 years ago you commented that you have a cost-saving plans of 3 years about EUR 14 million each year from 2016 to 2018. And last year, you have remissed some of those cost savings to drive commercial momentum. And I was wondering what do you think the growth saving would be for this year? And what do you think the net would be?

Okay. So I spoke only about cable. So now your question, it's about all the cost-saving. And as I said in my comment, we start -- we are starting this Q1 by mainly saving in the commercial cost. And we decreased, for example, the subsidies by 30%. And maybe you can find what is the absolute value in our financial reports, what is the absolute value of our -- in commercial investment, but 30% is quite huge. So yes, we want to continue to have the same goal on cost-saving. And the main items are and will be the commercial investment, so subsidies. Thanks to installments. Thanks to convergent. And on the indirect cost, we see a stable labor cost despite the growth. And we see also IT network optimization, thanks again the transformation. So all-in-all, we see -- and I don't want to disclose, but we see an increase in margin looking forward.

Just 2 questions. Firstly, following up on the postpaid discussion. And if you extrapolate 30% lower subsidies going forward as part of your cost-cutting plan. And do you think about the competitive dynamics that we see in the first quarter and into the second quarter, in particular some of the base offers? Do you think you can continue to grow the postpaid base? Or should we take your comments about value over volumes as meaning that the postpaid base could decline in the future, maybe just 1 or 2 quarters? And how do you sort of reset some of your policies? And then secondly, just regarding the cable targets you've given. Firstly, on the 100,000 target by the year-end. And you mentioned in the release that you expect some benefit from the easy-switch campaign in the second half. So I was wondering why that isn't slightly more aggressive in terms of being able to do more than 100,000 given the current run rate? And then secondly, around the 10% longer term target. Within that target do you assume a move to cost-plus regulation? And also do you expect any -- some material update with the market review that's due from the BIPT? Because clearly, it could just be a market review and then further consultations, which potentially take quite a long time to get to cost-plus. It would be interesting to get your thoughts.

On the postpaid base. We didn't give guidance on the customer base. However, I can mention and highlight the fact that we have been, since a number of quarters, positive on net adds. And we are not willing to have a declining base. So maybe I won't comment anymore, but I don't think that we are more or less guiding into declining postpaid base. On the second question -- yes, I say, we are going to and we have decreased our subsidies, but we have other tools to be able to attract our customers. And as a good example, we have just launched the installments offer. As you know, thanks to the installment our customer are able to have an high-end handset. And so we see may be a more efficient than subsidies tools to attract our customers. Always looking at the best balanced value and volume on this.

On the second question, on the ambition by the end of year, is this ambition aggressive enough? I would say, I'm happy to have this question, because I think it's good to see that the observers are starting to consider that we are being success in entering this market. Usually, ask some question about, "Are we going to achieve our targets?" And so now the question is, "Why are we not more aggressive?" So I take it very positively. Well, we want to remain, of course, cautious in our -- in giving any indication. But we might be a little bit above this target. Still it is a competitive market. But we are confident in reaching this ambition. And then on the question on the 10%, and is this depending on the cost plus and the BIPT regulation? As I mentioned in my introduction, we strongly believe that the move towards cost-plus is absolutely necessary and that there are very, very, very good arguments in moving to the cost-plus. Of course, this can take a little time. And we are not expecting our competitors to either way towards cost-plus. And we will, of course, do what we can to accelerate as much as possible. But we strongly believe that this move towards cost-plus is really something that should happen in our view.

My first question is, can you just come back on the SMS revenues, and sorry if I missed that. But I don't think you gave us an indication of how much total revenues today you're still generating from SMS? I'm just trying to understand what is the possible downside risk on these revenues. And my second question is just trying to come back on one of your answer, which is about the promotions in the market. And perhaps, just taking specifically the example of the promotion from BASE that are running, I think until the end of June. What if they decide to sort of keep that level of promotions going forward? Is it something -- it's a belief obviously, but is it something that would then possibly, let's say, change your plans? Or need you to sort of adjust a little bit? Sorry again, it's trying to ask you probably the same question that you had already? And then my last question, is there any data point you could give us in terms of the migration of users from the EUR 15 plans to the EUR 25 plans, I think the Koala Plans, which is something that you tried to encourage with the revamp of the product for you which was done, if I remember correctly, in November or October of 2016?

So excuse me, if I was not so precise on the SMS revenue. So I'm going to be precise. So I think it was not me, but 2 years ago the team -- the management team said the SMS revenues is about EUR 200 million. And we -- in the past, we have seen a decrease by about EUR 1 million per term. So you can imagine the level at the end of 2016. And so it's now a new trend or just one-off effect, we don't know exactly. We see a decrease of EUR 4 million just on Q1. So we'll see if the trend is going to continue, but it's quite a strong decrease compared to last term and last year. But again, all-in-all, bottom line, there is 0 effect on the EBITDA, just an effect on the revenue growth. Yes, I think and -- but there is a slight effect in ARPU, but again without value description and because it's, as you know, this revenue is coming from the other operator paying for the SMS and our cost is what we have to pay to the other operator.

Yes, it's a volume effect. I mean, the number of SMSs is decreasing and has been decreasing a little bit more, as Arnaud mentioned, in Q1 2017. On the second question and on the promotion and what we are going to do. Of course, we always remain concentrated to the market and remain -- we keep the possibility to be agile and in particular in promotions or in tactical actions. So we are ready and particularly ready to, I would say, react if needed, but not overreact to the competition move. And then on the migration and the new portfolio plan you have in the documents and in the slides that has been issued and released, the figure that we are talking to show. I think it's Slide 15 of the mix of postpaid SIM-only gross adds. And you can see on that slide that the new portfolio has really changed this mix and has really helped us to improve this mix towards EUR 25 and more tariff plans. That's -- it's -- it is now much more balanced between, I would say, the tariff -- the low-end tariff plans below EUR 15 and higher one above EUR 25. And you can see this good mix following the launch of our new portfolio.

Can I add? So we are now above 50% 4G penetration. We've also seen that for the first time we've been pushing through the 1.5 gigabytes data thresholds for our smartphone population. So to some extent, it suggests that there is a large batch of customers that is now not well-positioned anymore with their EUR 15 tariff plan, so to some extent it could help drive up the value there in the coming quarters based on their increasing usage. And I think, in particular, this quarter I think that volume of this group increased by 200 megabytes, whereas in the previous quarters it was only 100 megabytes. So I think the trend there is really strong.

I've just got 2 please. You mentioned earlier in your opening remarks that you are hoping for some changes in the way that the cable wholesale is implemented. And I took that to mean in terms of how the product is installed or executed or the requirements on your wholesale partners. Can you talk about what those changes might be and how they could kind of improve the situation for you guys? The second was just a clarification. You obviously mentioned the shift to installment plans. Can just remind us if there's any significant accounting impact from that change?

Okay, so on the operational side, we have a number of, I would say, improvements that we are expecting. And I think it is something quite natural, because the regulation is quite new. So it's normal that when we are increasing the base and increasing the process, we are more and more willing to improve this operational process. Maybe to give you some example, we have some situation where there is a need to send 2 field people -- one from Orange and one from the cable operator. And in some situation, it's just they send the same subcontractor. And we, for instance, expect that in a number of situations we only have one people going to the field. We also expect some improvements between the information that we exchange with the cable operators in order to improve the quality of the data. And that helps us have the best answer to the customer, however, without having too much changes to make afterwards. So this is quite operational and this -- but still important as the volume is growing.

Yes, in terms of accounting, it's quite simple. For the installments, it's like you sell a standalone handset without subsidy. So we take day one, the price of the handset in our revenues compared to the subsidy where we put in our revenue only the gap between the price of the handset and the subsidy. So for the installment, it's like a standalone sale of handsets.

A couple of questions please. Just on your Slide 15 where you show the 2 different plans. Does that include switching volume on existing customer base in that definition of growth adds? And if not, if you could give some sort of view on how that's developing in Q1? And then relating to that, can you -- when you're talking about your marketing focus, can you give some understanding of what you're able to do to help drive that switch in the customers' interests? And then on the fixed line, in your guidance for the loss on fixed line, is that essentially the fixed cost number that you gave last year, plus a variable loss per customer, roughly like in Q4? Or you're assuming some sort of improvement and efficiency coming in later in the year to drive down the loss per customer?

Okay. On the first question, on the Slide 5 -- the Slide 15, sorry, as it's mentioned on the slide, it's only gross adds. So the figure is not considering the existing customer migrating from one price plan to another. For the cost of cable now, because it's not the cost on fixed, it's just the cost of our new fixed business and TV Internet business cable. It's about the same explanation as in Q4. In this cost, it's wholesale cost and content cost and some maybe less variable cost, indirect cost to implement the solution. And yes, we see improvement, as I said, because thanks to the economy of scale, we are going to save some cost in terms of customer care, in terms of IT and so on. So again, we see an improvement in terms of margin in this business model mainly due to industrialization and economy of scale.

Sorry just on the first question. I mean, given that it doesn't include the existing customers. Can you give a view on what's happening on the existing customer base? And maybe some understanding of what you've been able to do on CRM to try to promote switching going forward?

We have not disclosed the figures, but what I can tell you may be on the qualitative side, is that obviously with the growing and the increasing data usage from our customers and that you have seen that is reaching now 1.5 gigabytes on average. Of course, this is a clear opportunity to upsell our customers. And we are going to continue driving this upsell by targeting our customers, and while indeed reaching the maximum or close to the maximum of their allowance. And we are going to, indeed, have actions and to continue our dedicated actions to promote this upsell from existing customers.

Okay. And just one last point, it's more a comment. If you're -- given the confusion around with SMS, and roaming and so on, if you are able to give some sort of view on the profitable ARPU trends that would be really quite helpful to understand if the SMS doesn't make any difference at EBITDA, even if it makes a difference in ARPU, that would help us on the outside.

Peter, Siddy here. I'd just like to comment on your question there. I think, we've been transparent in the roaming impact for Belgium in Q1, EUR 3.8 million. To some extent we also disclosed our prepaid and postpaid customer base, so you are able to basically split the EUR 3.8 million, proportionally perhaps. I too calculated the quarterly impact on a per customer basis. As Arnaud already explained as well on the impact of the SMS interconnection, so you've understood that this quarter we had a EUR 4 million negative drag year-over-year compared to a EUR 1 million drag in the previous quarters, meaning EUR 3 million incremental impact of that. Again, using the same prepaid, postpaid ratio, you are able to calculate what the impact was on the postpaid ARPU. So to some extent you can back out what the real ARPU growth was. And I think instead of having a 1.1% ARPU growth, if you do the calculation, you probably end up with an ARPU growth of more than 5%, which I think in the context as where we are in the mobile market, which remains competitive, I think is a very strong realization. And again, reflects the solid monetization of mobile data within Orange Belgium.

Now you've given us your summary of it now, but it'd be helpful to see it in the materials so that people don't have to go through Jim to get there. But I appreciative very much the comments that you just gave, Siddy. Thank you.

3 questions. One, could you disclose how many percent of the existing prepaid customer base has already registered? Then secondly on Lycamobile, could you disclose the average ARPU? And then thirdly, 2 questions on the market review. So one is on the timing. I think in the past you said that you expected an outcome around May. Is that still the case or is there any delay? And then secondly, you seem pretty confident that there will be a move to cost-plus. I'm just wondering on what that is based.

Well, so on the first question, on the prepaid registration. I will not give any precise figure for now, what I can tell, as I mentioned earlier is that, we are on good track. We have very good process and we are accelerating. And we know that in this situation there is an acceleration by the end of the deadline. And once again, we have the, I think the best process of registration. So of course, what's important is also to consider and the question has been raised. We, of course, prioritizing the most -- the cost in the prepaid with the average ARPU. So it is also something very important to prioritize. Really the customers who are bringing ARPU and value in that process. On the third question, on the cost-plus and maybe I will ask you to, maybe, rephrase the second one. But on the first question on ARPU. And why are we, I would say, got a lot of confidence on the outcome. I think that there are different elements: first, I think that the market situation and the duopoly in Belgium is very high-priced in the market, is something that is quite abnormal compared to other countries. And this I think is the main driver to further -- the regulatory body that's also the, of course, the government to support the increase in competition in this market. Then of course, I think that our successful entry into the market that was not a given some 1 year ago is also an element confirming the ability to really bring this change in the market. And this has been also -- and this has proved the fact that, that regulation could really bring this change. And maybe, last is the fact that their current model on retail menus is showing its limitations. We are seeing issues with this model and maybe one of them, but it's not the only one, is the fact. And by the way, I believe that our competitors' moves are demonstrating the limitation of this model. It's a fact that it is based on the fixed-only price, because obviously you are not able to speak on the convergent bundle. The price from the fixed and the price from the mobile. So it's a model which is based only on the fixed price. And obviously, we are fighting in the convergent market. And the prices are evolving differently in those 2 markets. For instance, our competitors are increasing their price on the fixed-only markets, but not on the convergent market. So this is obviously something that is not sustainable. And this is also for me, a reason why along with the fact that the wholesale model in other European countries for fixed networks is also on the cost-plus. So I think that really all the elements are in favor of moving this model towards cost-plus.

I think your second question was about the ARPU of Lyca? So again, we disclosed last call the revenues coming from the MVNOs, explaining EUR 60 million was coming from Telenet. And Lyca was the biggest far more behind Telenet. So you can imagine a revenue not very far from EUR 20 million, so -- and you know the, maybe, the customer base of Lyca. So you can do your calculation.

One outstanding data point, I guess, is the balance sheet gearing, down at pretty well 1x leverage now. You know, given you do have this opportunity in fixed and you've had reasonable success, I just wonder why you're not using your balance sheet more to potentially accelerate your investment? And/or if you could give us any indications on how you see that evolving? And what you think is a flow beyond which, assuming no opportunity to invest in growth, you would return cash to shareholders?

Okay, thank you. On the investment side, we are not limiting investment that are value creative. Obviously, as we have done major investments in our mobile network today we don't need to extra invest in it. We already have a very, very good mobile network, and that's why our investments in the network, and I would say, in IT, I would say, in core mobile CapEx is able -- we are able to keep it stable. But obviously, we are investing and we are increasing our investments in the cable, and you can see that in this year. Because our investments in the Q1 has been increasing a lot, and this is due to the cable. So we are accelerating our investments to gain and to increase our market share in the cable in line with our strategy, and we will continue to do so. On the return to shareholders, not a question for Q1, we have (inaudible) that for the full year, and the next time to have this discussion will be beginning of next year.

Well, this is directly linked to the question on our targets on cable, because the investments are really proportional. I would say, there is, of course, a part of it which is fixed, but it's mainly proportional to the number of customers. And as we disclosed our targets, so you can see very clearly, where we want to go. And this is not only a question of investment, it's a question obviously of phase, of processes, and we want to make sure to keep the quality and keep the focus on the quality. That's why we are really focusing on improving the processes along with growth of the volume. And we are not limiting for cash or investment reasons the number of customers we want to achieve on cable.

The first question's on the subsidies. You mentioned that they were down 30%. I think Proximus has recently been tending to become more promotional activity again on the handset subsidies. Do you believe you can keep these reduced subsidies in the remainder of the year? That's one. And then the second, on the data monetization, if you look at BASE, which is now owned by Telenet, of course. We see BASE suddenly having double-digit data allowances on its mobile bundles. We see VOO offering 6 or 8 gigabytes for EUR 8. Do you believe, in the next quarters, this might be an issue for data monetization? Or how do you believe market on the latter point will really fall off in the next quarters?

Thank you. On the first question, on subsidy. I will not comment the -- my competitors' action on subsidy. But what -- as far as we are concerned, indeed, it is something we have managed to decrease, and we will continue on this trend. And this is also the result of the benefit of our convergent strategy and also of other solutions that we are providing our customers to finance their handsets and in particular, installments, that has been mentioned by Arnaud. So we think that it is possible in this market to continue a positive performance, while reducing the subsidy level.

On the data monetization question, as you mentioned that there has been some promotion activity. And once again this is not, I would say, our intention in tariff in particular the double data from BASE. And -- so what I can say is that we shows, and I think we demonstrates our ability -- when you look at the ARPU, our ability to continue driving this data monetization. And obviously, the traffic increase, which is -- it's very important, once again, it's 60% year-on-year. It gives really room to continue this data monetization. I would also remind the fact that in Belgium, besides those promotions, the tariff plans and the offers are not, I would say, kind of unlimited datas, we can see in other markets, and they are allowing this data monetization to continue.

I have 3 questions please. The first one is coming back to this whole sort of issue which we've debated so far on postpaid data versus the subsidy that was, I understand you're very reluctant to comment on what you're going to do next there. But I'm wondering, when you look at what happened in the first quarter, so the way you reduced the budget by, I think, more than 30% and the net adds came in where they came in. Do you think that, that is essentially a signal to the market and you're sort of hoping for a reaction? And you're sort of accepting what you saw in the first quarter with clenched fists and to grit your teeth and you're entirely happy with it? Or would you simply say, what the outcome in Q1 is this entirely acceptable from your point of view with regards to value creation? That will be my first question. The second one comes back to another question on the MVNO net adds. I think you indicated this could be mostly become lower, but I'm wondering whether Telenet has already started showing signs of my migrating customers over. And my third question is on the costs. So there were a couple of items that you have now identified the interconnect cost down maybe EUR 4 million year-on-year. The pylon tax obviously is out, (inaudible) are down and the cable costs are up. Now when I take out these sort of identified this -- identifiable effect, is the organic sort of underlying cost actually still down or is that increasing? So other than these sort of effects that we all try to get our heads around today, is the underlying cost going up or down?

I will ask Arnaud to answer the third question on costs. On the two first ones, on the subsidy, our strategy and what we are delivering is based on our own strategy and our own value creation than the market and the other, and our competitors are free to do what they want. What I was mentioning is based on our own strategy. And we think that this is the best way to create value. On the second question, on Telenet migration, I mean it's probably a question that you should ask them. I will only maybe recall the fact that we have an agreement running until end of 2018 with a minimum revenue commitment. And we have absolutely no sign that there is any modification to -- and it's, by the way, not possible. So I won't comment on the migration front and it adds to the base network, what I can mention is that there is still a big difference in the quality of the network that is still being monitored. And we -- our network is still very, very well ahead of the BASE network. So I think that there is some work to do on the BASE network still. On the cost, Arnaud?

On the cost, and if we can have an exercise to go line-by-line, but not too precisely. But yes, you're right, interconnection is decreasing. Again, thanks to SMS is decreased. So we have exactly the same effect. It's EUR 4 million effect on cost, interconnection cost. As we mentioned, we increased the access connectivity cost due to the cable connectivity. The customer equipments are decreasing. It was mainly our arguments around the subsidies and the decrease of the subsidies. That is for the direct cost. For the indirect cost, we are able, despite the cable, so new business, able to be stable in terms of overhead labor and in terms of IT and network. So structurally speaking, we think we can keep such a level of cost in terms of labor, IT and network despite the growth. Advertising and promotions, you know we have this LOVE campaign for Q1, it was higher than for Q1 2016, but it's slightly higher. And for all the other expenses, it's stable. So the message is clear. Thanks to again, economy of scale, efficiency, transformation. We are able to stabilize our costs and to increase our EBITDA margin in absolute value. Thanks to the growth of our revenues. And it's mainly due to the growth in terms of fixed revenues and increase of the margins of the fixed business.

Okay. Thank you all for your interest in our company. We are looking forward, obviously, to meet with all of you in the coming weeks and months. And as always, should you have any further follow-up or outstanding questions, I will be more than happy to answer them in the coming days. So thank you. Good end of the week and speak to you soon.